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Navigating Alabama Payroll Taxes
Alabama employers must comply with several state payroll tax requirements, including New Hire Reporting, state income tax withholding, and unemployment insurance (UI) reporting. These obligations are administered by the Alabama Department of Labor (ADOL) and the Alabama Department of Revenue (ADOR) and apply to most employers with workers in the state.
This guide provides a comprehensive overview of Alabama payroll tax filing requirements, covering New Hire Reporting, withholding Forms A-1 and A-6, and unemployment insurance forms such as UC-CR4 and UC-10-R, along with filing deadlines, reporting methods, and compliance considerations to help employers stay up to date and avoid penalties.
Alabama New Hire Reporting
New Hire Reporting is a mandatory legal requirement for all employers in Alabama to report newly hired, recalled, or rehired employees to the Alabama Department of Labor / Alabama Department of Workforce. This reporting supports child support enforcement and helps reduce fraud in unemployment and public assistance programs.
Who must report
All Alabama employers — including government entities, nonprofit organizations, and private businesses — must report newly hired or recalled employees, regardless of the number of employees. There are no exemptions for any employer
type. Learn more
Multi-State Employers
Multi-state employers have two options:
- Report all new hires to Alabama only if you choose Alabama as your designated single reporting state; or
- Report new hires to each state where employees are working — both options are permitted by law. Multi-state employers who report all hires to Alabama must do so electronically. Learn more
Reporting Independent Contractors
-
Alabama does not require employers to report independent contractors as part of the new hire reporting
program. Learn more
What to report
- Employee Details: Employee’s legal full name, Employee’s physical address, Social Security Number (SSN), Date of hire (latest date services for remuneration first began), State of hire (for multi-state employers as applicable)
- Employer Details: Federal Employer Identification Number (FEIN), Employer name, and business address as it appears on quarterly wage reports.
When to report
Employers must report new hires within 7 calendar days of the employee’s first day of work or reemployment. Electronic filers may transmit data twice monthly (not less than 12 days and not more than 16 days apart) instead of reporting individually.
How to report
Alabama offers multiple ways for employers to submit new hire reports:
1. Online (Recommended):
- Report new hires through the official Alabama New Hire Reporting Portal.
- Employers with 5 or more employees are required to use electronic reporting via the portal.
- The portal supports both individual manual entries and bulk upload (CSV or TXT file formats).
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2. Fax:
- Complete the new hire report and fax it to (334) 206-6020.
- Keep a copy of the fax confirmation for your records.
3. Mail:
Complete the New Hire Report and mail it to:
Alabama Department of Workforce
Attn: New-Hire Clerk
50 N Ripley Street
Montgomery, AL 36130
Use certified or trackable mail for proof of delivery.
New Hire Reporting Penalties
Employers who fail to report newly hired or recalled employees in the required timeframe may be assessed a penalty of up to $25 per violation.
Corrections
Corrections to previously submitted new hire reports should be made through the Alabama New Hire Reporting Portal in accordance with the system’s procedures. See how to correct
Alabama Withholding Tax Forms (Form A-1 & Form A-6)
Alabama employers are required to file withholding tax returns to report and remit state income tax withheld from employee wages to the Alabama Department of Revenue (ADOR). These filings help ensure that the taxes deducted from employees’ wages during the year are properly reported and paid to the state.
Who Must File
All employers and withholding agents in Alabama who are required to withhold state income tax from employee wages must file withholding tax returns with ADOR. This includes private businesses, nonprofit organizations, and government entities that withhold wages subject to Alabama income tax.
Employers must register with ADOR and obtain a withholding tax account before filing any returns.
Even if no tax was withheld during a period, employers must still file the required return for that period.
Important Note:
Employers who make withholding tax payments of $750 or more must file and pay both the withholding tax return and the payment electronically through the My Alabama Taxes (MAT) portal. Employers not meeting the $750 threshold can also choose to file electronically, which is strongly encouraged. Learn more
Form Types
Form A-6: Employer’s Monthly Return of Income Tax Withheld
- Purpose: Reports and remits state income tax withheld from employee wages for a specific month.
- Who must file: Employers must file Form A-6 for any month in which the amount of tax withheld exceeds $1,000. Monthly returns are only required for those months where withholding exceeds the threshold.
- Due Date: Due on or before the 15th day of the month following the month being reported. For example, January withholding is due by February 15.
- Where to file: File electronically via the My Alabama Taxes (MAT) portal; paper filing is permitted only when personalized coupons aren’t available, and electronic filing is not required.
Form A-1: Employer’s Quarterly Return of Income Tax Withheld
- Purpose: Reports and remits total state income tax withheld during a calendar quarter, less any tax already remitted on monthly Form A-6.
- Who must file: Every employer or withholding agent must file Form A-1 for each quarter, including those who filed monthly Form A-6 returns or those who withheld less than $1,000 in a month.
-
Due Date: Due on or before the last day of the month following the end of the quarter being filed.
- Quarter 1: (Jan–Mar) April 30
- Quarter 2: (Apr–Jun) July 31
- Quarter 3: (Jul–Sep) October 31
- Quarter 4: (Oct–Dec) January 31
- Where to file: Electronic filing via MAT is encouraged; required if total payments are greater than or equal to $750.
What to Report
When filing either Form A-6 or Form A-1, employers must report:
- Employer information: Business name, address, withholding tax account number (FEIN/assigned account identifier).
- Total wages paid: Wages subject to Alabama income tax during the reporting period.
- Total Tax Withheld: Amount of Alabama income tax withheld from employee wages for that period.
The Alabama Department of Revenue provides bulk upload layouts for A-1/A-6 electronic submissions. Learn more
How to File
You have several filing options to submit Forms A-1 and A-6:
1. Online (Preferred):
- Employers should use the My Alabama Taxes (MAT) portal provided by the Alabama Department of Revenue to file withholding tax returns and make payments electronically.
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2. By Mail (if permitted):
- If not filing electronically and using paper forms, returns may be mailed to the ADOR withholding tax address listed on the forms or in the Withholding Tax instructions booklet. Due dates still apply.
-
Complete the forms and mail them to:
Income Tax Administration Division,
Withholding Tax Section,
P.O. Box 327483,
Montgomery, AL - Payment by check can be included with the mailed form.
Penalties
Employers in Alabama must file and pay withholding tax returns (Form A-1 and A-6) on time to remain compliant with state payroll tax requirements. Failing to timely file returns or remit taxes due can result in penalties imposed by the Alabama Department of Revenue (ADOR).
Late-Filing Penalty
If an employer fails to file a required Alabama withholding return (Form A-1 or A-6) by the statutory due date:
- Penalty: The greater of 10% of the tax due or a minimum of $50.
- This applies whether the return shows tax due or indicates no tax owed, and even if no amount was withheld.
- If both the return and the payment are late, the penalty for late filing is added to the penalty for late payment.
Late-Payment Penalty
If an employer fails to pay the amount of Alabama withholding tax shown as due by the filing due date:
- Penalty: 10% of the tax due for late payment.
- This penalty applies separately from the late-filing penalty.
- When both the return and the tax payment are delinquent, the late-filing and late-payment penalties are added together and reported as one combined figure on Line 6 of the return.
Alabama Withholding Corrections
If an error is found on a previously submitted Form A-6 or A-1 (e.g., underreported wages or withholding amounts), employers should file an amended return through the MAT portal following the ADOR’s instructions.
Alabama Unemployment Insurance (UI) Reporting —
Form UC-CR4 / UC-10-R
Alabama employers must file quarterly Unemployment Compensation (UC) wage and contribution reports to the Alabama Department of Labor (ADOL). These reports ensure the Alabama Unemployment Compensation Trust Fund is properly funded to provide benefits to workers who become unemployed through no fault of their own.
Who Must File
All Alabama employers with one or more workers in covered employment must file quarterly unemployment
insurance reports.
This includes businesses of all sizes, nonprofit organizations, government entities, and any employer with an active Alabama UI account.
You must file Form UC-CR4 and UC-10-R even if no contributions are due for the quarter.
Taxable Wage Base & Contribution Rates
Alabama unemployment tax is assessed based on each employee’s taxable wages and the employer’s assigned
experience rate.
Annual Wage Base:
- For 2025, Alabama’s unemployment insurance taxable wage base is $8,000 per employee per year.
- Wages paid to an employee above $8,000 are not subject to UI tax for the calendar year.
Contribution Rate:
Alabama assigns UI contribution rates annually based on an employer’s experience rating.
-
New Employers:
- 2.70% standard new-employer rate
- Construction employers may be assigned a different statutory rate
-
Experienced Employers:
- Rates vary based on benefit charges and payroll history
- Typically range from 0.20% to 6.80%
What to Report
Employers must report the following information each quarter:
-
Employee Wage Information:
- Total gross wages paid during the quarter
- Taxable wages (up to the $8,000 wage base)
-
Employer Information:
- Legal business name
- Alabama UI Account Number
- Federal Employer Identification Number (FEIN)
- Reporting quarter and year
-
Quarterly Contribution Data:
- Taxable wages multiplied by the employer’s assigned unemployment insurance contribution rate
When to File
Alabama UI reports must be filed quarterly. The due dates are:
- Q1 (Jan-Mar): April 30
- Q2 (Apr-Jun): July 31
- Q3 (Jul-Sep): October 31
- Q4 (Oct-Dec): January 31 of the following year
How to File
Alabama provides multiple filing options for unemployment insurance reporting.
1. Online (Recommended):
- Log in using your Alabama UI account credentials
- Enter quarterly wage and contribution information
- Submit the report electronically
- Make payment through approved electronic methods
Electronic filing is strongly encouraged for accuracy and faster processing.
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2. By Mail:
Employers permitted to file paper reports may submit completed forms by mail.
-
Mail the completed form to:
Alabama Department of Labor
Unemployment Compensation Division
P.O. Box 995
Montgomery, AL 36101-0995
3. By Fax:
- You can fax the completed form to (404) 232-3220
- Keep a copy of your fax confirmation for proof of submission
Tax Payments
UI tax payments must be submitted separately from paper wage reports.
- Electronic Funds Transfer (EFT)
- Online payment through the ADOL portal
- Check or money order (if mailing)
Payments must be made by the quarterly due date to avoid penalties and interest.
Alabama Unemployment Insurance Penalties
Employers must file quarterly UI reports and pay contributions on time. Failure to comply results in penalties under the Alabama Unemployment Compensation Law.
Late Filing Penalty
If a quarterly wage report is filed after the due date:
- $25 or 10% of the contributions due, whichever is greater, per report
Late Payment Penalty
If UI contributions are not paid by the due date:
- 10% of the unpaid tax due
- Interest accrues at 1% per month until paid
Alabama Unemployment Corrections
If you discover an error on a previously filed Alabama UI report:
- Submit a corrected or amended wage report through the Alabama UI online system
- Update incorrect wages, taxable amounts, or contribution calculations
- Pay any additional tax, penalties, or interest due
Form A-3: Alabama Annual Reconciliation of Income Tax Withheld
Form A-3 is Alabama’s annual withholding reconciliation form. Employers use this form to summarize the total Alabama income tax withheld from employee wages during the calendar year and to reconcile those amounts with the withholding payments already submitted to the Alabama Department of Revenue (ADOR).
Form A-3 ensures that the total withholding reported throughout the year matches:
- The Forms W-2 issued to employees, and
- The withholding tax payments made to the state during the year.
Who Must File
You must file Form A-3 if you are an employer that:
- Withheld Alabama income tax from employee wages during the calendar year, and
- Is required to file Forms W-2 for those employees
This requirement applies to all employers with Alabama withholding, including:
- Businesses with employees working in Alabama
- Employers registered with the Alabama Department of Revenue for withholding tax
- Employers filing Forms W-2 reporting Alabama wages and withholding
Even if all withholding was properly remitted during the year using Forms A-1 and/or A-6, Form A-3 is still required as the annual reconciliation.
What to report
Employers must report:
- Total Alabama wages paid during the calendar year
- Total Alabama income tax withheld from employee wages
- Total withholding tax payments made during the year
- Any difference between the tax withheld and the tax paid
Form A-3 must reconcile exactly with:
- The sum of all employee Forms W-2, and
- The total of quarterly and monthly withholding payments already filed with ADOR
When to File
- Due Date: January 31, following the end of the calendar year
- Form A-3 must be filed along with employee Forms W-2
If January 31 falls on a weekend or state holiday, the due date moves to the next business day.
Failure to file Form A-3 on time—or filing it with incorrect totals—may result in penalties and interest assessed by the Alabama Department of Revenue.
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Frequently Asked Questions
Do all employers in Alabama have to report new hires, or are there exemptions?
Yes, all employers are required to report newly hired and recalled employees. There are no exemptions for any employer type (including non-profits, governments, and religious entities).
What counts as a “newly hired” employee that must be reported?
A newly hired employee is someone who has never been previously employed by the employer or who has returned after a separation of at least 60 consecutive days. The report must include full name, SSN, address, date of hire, and employer information.
Can independent contractors be included in new hire reporting?
No, Alabama follows federal guidelines and does not require the reporting of independent contractors through the New Hire Program.
When should I use Form A-6 vs. Form A-1 for withholding?
Use Form A-6 when monthly withholding exceeds certain thresholds (typically over $1,000) and Form A-1 for quarterly reconciliation of withholding tax. Both are filed through the Alabama Department of Revenue.
What if my payroll software doesn’t automatically file Alabama withholding returns?
Employers often ask this when automation fails — you must ensure your withholding returns are still filed on time via My Alabama Taxes or upload files yourself; software delays do not extend statewide deadlines. (Common online employer concern about software/remittance automation.)
How do employers file Form A-1/A-6 in bulk?
Alabama provides an official bulk file layout for A-1/A-6 that must be used for electronic uploads. Updated layouts (e.g., for 2024+) include additional required fields for proper reporting.
How do employers correct an error on a previously filed quarterly UI report?
To correct previously submitted quarterly UI reports or wage data, employers must complete and submit Form UC-10-C (Statement to Correct Information) online via the ADOL eGov portal.
Can I file the quarterly UI wage reports on paper?
No — quarterly Contribution and Wage Reports (Form UC-CR4) must be filed online via the ADOL eGov system. Paper filings are not accepted for these reports.
What happens if I need help with filing UC-CR4 electronically?
If you encounter issues with filing UI reports electronically (UC-CR4), you can contact the Audit and Cashiering Unit at the Alabama Department of Labor
for assistance.
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